Fake Sales, Fake Accounts, False Claims and Fake Foreclosures: REMIC Trust does not own,control or get any money from your loan

The problem with court decisions like Am. Fid. Assurance Co. v. Bank of N.Y. Mellon, No. 18-6210 (10th Cir. July 7, 2020) is the same as with most decisions, to wit: They are assuming that there was an actual sale of loans to the trust. In fact, other than some data entry at the desk of a trader for the manager of collateralized debt obligations within an investment bank, no such sale ever took place. No money changed hands. This is the kind of sleight of hand that magicians use. 


The reality is that when a securitization scheme starts, the investment bank goes out and borrows money to pay to homeowners (call it a loan or whatever you want). The investment bank is a borrower. It has little or no money actually invested in any transaction with any homeowner. 


Then the investment bank goes out and sells “certificates” (aka mortgage bonds) to investors who erroneously think they are getting a security backed by mortgages. In fact, they are getting nothing but an unsecured IOU from the investment bank doing business under the name of an unregistered trust.

The indenture for the certificate does NOT convey and often disclaims any conveyance of any right, title or interest in any debt, note or mortgage or any right to administer, collect, enforce or even gain knowledge about any debt, note or mortgage. 

In the typical securitization scheme, the investment bank sells DATA ABOUT a list of loans that were funded through loans to the investors and then to other investors who are betting on the performance of the certificates in the future and on the open market.

The list of loans was funded by, for example, $600 million in loans to the investment bank. But the certificates are sold for around $1 billion to investors who are actually subject to many restrictions and deductions from payments to which they think they’re entitled. 


So when the investment bank collects the money from investors, it wipes out the loans used to fund homeowner transactions, and pockets the balance. I.E. THERE IS NO LOAN RECEIVABLE BALANCE BUT THE “BORROWER” DOES NOT KNOW THAT. 


There is no loan account on the books of any person or company or trust that shows any homeowner transaction as an asset receivable.

The initial “extra” money comes from a yield spread premium between the amount of money investors are expecting to receive and the amount of loans that the investment bank needs to make in order to achieve those levels of payments to investors. THAT COMPENSATION IS NOT REVEALED BECAUSE THE INVESTMENT BANK IS NOT DISCLOSED AS LENDER, CONTRARY TO LENDING LAW REQUIREMENTS.  


Borrowers would be very interested to know that the actual lender is an investment bank who is earning 100 times normal fees totalling 2/3 of their entire loan as soon as the homeowner signs the paperwork )and sometimes when the application for loan is filled out). And the Federal truth in Lending ACt and most state lending laws require such disclosure. 


Borrowers would of course bargain for greater incentives once they know the “lender” is not relying on the viability of the loan nor the receipt of interest and principal payments for its reward. That is the whole point of the many federal and state laws that were passed to protect borrowers from this sort of illegal and unethical conduct. 

And because no borrower received any information regarding how this was done, they start making payments as directed by people who have no authority to direct anything. The money collected is through a network of lockbox arrangements that are directed primarily by black knight, formerly landing processing systems. Black Knight make sure the money gets back to the investment bank no pockets the money as untaxed revenue.

It all such foreclosure actions there is no injured party because everyone has either received all payments required on their contract or settled with the investment bank.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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3 Responses

  1. The damages are a given, but how do you argue “MOSTLY or SOMEWHAT COMPLIANT?”

    “GAAP REQUIREMENTS BY STATE

    FULLY GAAP COMPLIANT
    Local and county governments and school districts are required to prepare financial reports under GAAP.
    MOSTLY GAAP COMPLIANT
    Two of three regulated state governing boards and districts must comply to GAAP.
    SOMEWHAT GAAP COMPLIANT
    One of three regulated state governing boards and districts must comply to GAAP.
    NOT GAAP COMPLIANT
    Local and county governments and school districts are not formally required to comply to GAAP.

  2. You have to have a damage in court to win. If it is stolen, you can claim
    a damage. If the bank violated GAAP, then the CPA audit is a fraud and
    the bank management and CPA will go to jail and the SEC can go after them so they cannot say that they did not follow GAAP.
    If they follow GAAP, we know what the bookkeeping entries are and they did the opposite to what you understood the agreement was to be. You only care about the agreement. You only care about GAAP. You only want them to explain the details of the agreement they wrote. You want the original promissory note back to see the stamps to see if you are paying the proper party endorsed on it. See UCC 3-302. Adequate assurance of due performance UCC 2-609 is for the sale or purchase. If you demand adequate assurance of due performance, the other party must give assurance in 30
    days or the deal is off for purchases. The bank will try and demand
    that this does not apply to them. If they do this they admit that the original alleged lender never purchased the note from you.

  3. So, basically the investment banks borrowed against the signatures of investors and are paying them a minor stipend for the use of imaginary funds. That’s almost identical to the process with the home owner, but that sucker pays THEM at a higher %. WOW!! AND THE COURTS HAVEN’T THE BRAINS TO FIGURE IT OUT, or don’t want to.

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